Development of hrm in sri lanka by jayadeva de silva

1. Development of HRM in SriLanka By Jayadeva de Silva M.Sc,MBIM.FIPM,FITD Supplementary reading material for a lecture delivered on the subject Development of Legal framework & labour policy which impacted on HRM practices The history of state intervention in industrial relations through law commences from about 1830 with the growth of coffee and tea plantations industries in Sri Lanka. Prior to that the master and servant relationship was regulated largely by custom. The necessity for cheap unskilled labour for the successful operation of plantations, combined with a labour crisis in 1846, led to an Ordinance in that year being introduced to promote State-sponsored immigration of labour from South India, resulting in the formation of the countrys first regimented labour force. 1

2. Today the scope of labour laws are broad as any other system of labour law and encompasses a wide range of areas involving the employer-employee relationship in addition to the focus on social security, wages, terms and conditions of employment, industrial safety, employment of women and children, etc... In Sri Lanka as in most developing countries, the tendency is for the State to interfere in industrial relations by setting up standards of conduct for both employers and employees. These standards take the form of legislation or pronouncements of special courts or tribunals set up by legislation. In Sri Lanka the State expresses its policy in both ways. In fact, it would be true to say that the awards or orders of the extra judicial tribunals, which are binding on the parties to a dispute and which constitute a significant source of industrial law, are by far the most important agency through which the State intervenes today in industrial relations in Sri Lanka. This form of intervention is indirect rather than direct. In view of the growing labour unrest during the early years of the Second World War, along with the expansion of the regimented workforce, as a result of the State and the private sector turning out to be employment generators, it became necessary for the government to introduce an institutionalized industrial relations framework. This situation led to the introduction of the Industrial Disputes Act in 1950, which is considered to be the vital backbone that governs the industrial relations system of Sri Lanka. Since its inception it has gone through a long process of change and reform to make it what it is today. At present, it addresses issues arising out of industrial disputes, termination of services of employees, collective bargaining, labour arbitration, Labour Tribunals and the functioning of Industrial Courts. However the public sector employees are not covered under the Industrial Disputes Act. Industrial relations issues of public sector workers are governed through a code of rules adopted by the Cabinet of Ministers named the Establishment Code. It is presumed that the exclusion of the public sector workers from the purview of the Industrial Disputes Act is based on the assumption that the State is expected to perform the role of a model employer and it will rightly discharge all its duties towards its employees. The functioning of the public sector today creates serious questions about this notion and the Establishment Code being highly inconsistent with international conventions and declarations dealing with the rights of workers. The total exclusion 2

3. of public sector workers through the process of collectively bargaining and restrictions in forming and federating unions among public sector workers are some prominent issues that need to be addressed. The following is a structural outline of the scope of local labour laws in SriLanka which impacts on HRM in SriLanka 1. Terms and conditions of employment - The Shop and Office Employees (Regulation of employment & remuneration) Act - Wages Board Ordinance 2. Social security - Employees provident Fund - Employees Trust Fund - Payment of Gratuity Act 3. Industrial safety - Factories Ordinance - Workmens Compensation Ordinance 4. Industrial relations - Industrial Disputes Act - Termination of Employment (Special provisions) Act - Trade Union Ordinance 5. Employment of women and children - Employment of Women, Young Persons and Children Act - Maternity Benefits Ordinance Present trends At present the entire system of labour law is being subjected to a process of reform amidst protest from various quarters of the society. The government has already liberalized restrictions on overtime hours permitted on female workers and the need to obtain the consent of workers to perform over time has been removed providing more freedom to the employers. In addition, a free hire and fire policy is also being formulated and the payment of compensation is to be done with a fixed formula of calculation based on the years of service of each employee. These provisions are to be effected through 3

4. amendments to the existing Termination (Special Provisions) Act and if implemented can cause serious threats to union organizing in the private and export sector industries, as union activists can easily be fired through victimization, which may discourage workers taking up the initiative of organizing. The government of Sri Lanka has also sought for the special incentive scheme of the EU GSP in order to have free access to the EU market. This application is still under consideration. Similarly the government has also made an application for the US GSP facility for the export of apparels to the US market. Both these trade regimes put special emphasis on the observance of core labour standards and Conventions No.87 & 98 in particular. In August 2002, the government signed a Trade and Investment Framework Agreement (TIFA) with the United States in order to gain free access to the U.S market. This trade agreement also warrants the observance of good standards of labour practices on the part of the beneficiary country. Some key amendments to the Industrial Disputes Act have also been tabled before the Parliament with the aim of introducing a new system named the 4:2:1 Formula which intends to conclude all unfair termination of service applications before Labour Tribunals within four months, Arbitration processes within two months and involuntary termination of service applications within one month. In principle expecting the resolving of industrial disputes is a positive move and is welcome. However its implications carry serious practical impossibilities and inconsistencies and can affect the chances of justice being meted out equally at all levels, apart from disregarding some principles of the rules of natural justice, which in fact is the live wire of the labour adjudication system in Sri Lanka. The 4:2:1 formula was almost imposed and had little or no constructive dialogue among the triparties of the process, which left the point of view of organizations of workers completely unincorporated in the exercise. In short, at present the trend is more towards flexible and liberal labour administration with less government involvement. The government is also more interested in promoting a separate set of labour guide lines for special investment and export processing zones to deal with industrial relations issues in them. Finally, the notable feature of the present labour administration system is the fast declining standards in the labour standards enforcement aspect. Its 4

5. now gradually marking the beginning of a new labour unrest among employed workers. Trade Union Structure which impacted on HRM in SriLanka Historically trade unions were at the forefront of the movement for independence prior to 1947, and unions therefore fulfilled a political role at that time. This tradition of political involvement has persisted to this day, and political parties continue to seek the support of the working population through trade unions and also manipulate unions to achieve political objectives from time to time. This made it easy for political parties to penetrate unions and ultimately dictate terms to unions, thereby making unions a mere organ of the political machinery. This led towards unions not being able to produce leaders from within their own rank and for the creation of a culture of political hierarchy appointing trade union leaders. In fact the outsiders who have prepared to assume trade union leadership have invariably been politicians, who are able to highlight in Parliament the grievances of the workers in a narrow, political angle rather than addressing the genuine interests of workers in a more constructive manner within the context of the current developments in the global workers movement. Despite the political involvement of trade unions in Sri Lanka, strikes for purely political purposes are not frequent and unions have never been able to influence the political process. In most unions, characteristics of union democracy are hardly visible and the leadership is naturally being held by an aging set of veterans who are not open for change or ready to accommodate young activists. The independent unions in Sri Lanka are relatively small and often work in isolation. It is also difficult for them to get on with traditional trade union organizations due to ideological differences. Independent trade unions are also visible in some areas of the private sector, export industries and EPZs, banking sector, teaching and in some areas of the public service. Local labour laws divide unions as public and non public sector unions and these two categories are not permitted to federate with each other. The non public sector unions represent the private and semi government owned business and industrial enterprises. Sri Lanka does not have a national trade union centre as seen in many countries, due to this segregation of unions by law and the inherent political identities of the unions. 5

6. Further reading Please read the chapter titled Future of HRM in SriLanka in the book titled Humantalents Management by Jayadeva de Silva 2000.A Project SMED publication. This book is available in the IPM Library It can be also downloaded from www.slideshare.net/Jayadeva Your Notes djayadeva@gmail.com Tel 077 7272295 6

7. Let us familiarize with some facts djayadeva@gmail.com Send a blank e mail to humantalents-subscribe@yahoogroups.com for FREE membership 7